NEW YORK, June 3 (Reuters) - The chief executive officer of Nextel’s bankrupt Latin American arm denied giving bondholders a sweetheart deal as he testified on Wednesday in New York on the company’s $4.35 billion restructuring plan.
NII Holdings Inc, which operates the Nextel brand in Brazil, is trying to emerge from Chapter 11 bankruptcy protection under a plan to hand control to Aurelius Capital Management and other holders of $4.35 billion in bonds.
The plan is slated for four days of trial in New York bankruptcy court, where one creditor faction alleges NII was a doormat for greedy creditors who designed the plan themselves.
Steven Shindler, NII’s chief executive officer, testified to the contrary on Wednesday in Bankruptcy Judge Shelley Chapman’s crowded Manhattan courtroom, saying he was “never shy about expressing our view.”
NII’s lawyer showed an email in which Shindler railed at some of Aurelius’ demands. “My blood does not boil over too often, but I am there and ready to unleash the fury,” Shindler wrote.
Shindler testified that he rejected multiple restructuring proposals he deemed unfair, and initiated a meeting at NII’s Reston, Virginia, headquarters with Aurelius boss Mark Brodsky. “I wouldn’t call it friendly, but it was a healthy dialogue,” Shindler said.
NII’s restructuring plan is based on a settlement resolving several classes of legal claims against NII over intercompany transactions. The most contentious allegations center on NII’s allegedly improper release of three subsidiaries from guarantees of certain company debt.
Aurelius and other bondholders received about $285 million to settle those claims. A creditor faction known as the CapCo 2021 group says that money effectively reduced its recovery by $150 million - more than a third of its total payout.
CapCo argues the settlement should be thrown out because the claims were never Aurelius’ to bring, and had no merit anyway.
In CapCo’s view, NII let Aurelius engineer the settlement, assigning an arbitrary value to the guarantee claims to make up for concessions on other issues.
NII accepted whatever resolution would yield consensus among its largest creditors, the CapCo group argued in court papers.
NII went bankrupt in September, later selling its Mexican assets to AT&T Inc for $1.9 billion.
The settlement could save $170 million in litigation costs, said Kenneth Eckstein, who represents an unsecured creditor group that supports the deal.
Aurelius has a reputation for aggressive bankruptcy litigation, and spent years pursuing costly lawsuits in media company Tribune Co’s bankruptcy. (Reporting by Nick Brown; Editing by Lisa Shumaker)